Well, certainly, it's not as if a person instantly and magically reaches the "age of reason" on his 7th birthday. That's just a rule of thumb laid down by the Church. I commend the priest mentioned on this thread who was hearing the Confessions of children younger than 7 ... on a case-by-case basis. I also believe that some children should be admitted to Holy Communion before the age of 7. I don't agree with the Eastern custom of letting even 2-year-olds receive Communion because they have no idea that what they're doing is different than eating a snack at home, and that's wrong.
I believe that it would be a very extraordinary thing for a child under the age of 7 to be capable of committing a mortal sin; my general feeling is that they would have to be closer to 9 or 10 in most cases. This does not mean that they are not capable of reason TO AN EXTENT. This is probably true from the age of 3 or 4 up. But to be able to sufficiently and fully understand the nature of grave sin and to deliberately will it, I suspect that very few children under 7 would be capable of it.
I don't like the phrase "reach the age of reason". There's no magical "age of reason", but a gradual progression to reason. If there's an "age of reason", the expression means, rather, the age that the Church uses as a rule of thumb for a child having attained a degree of reasoning sufficient to commit grave sin.